What is a "Bake Off" in the M&A Process?
What is a "Bake Off" and How Does That Apply to PropTech Acquisitions?
Yes, you heard it right — “bake off” is actually a term people use in the startup world, primarily in M&A (mergers and acquisitions) and investment banking circles.
What is a "Bake Off"?
In M&A, a bake off refers to a competitive final round where a few selected buyers — typically those who submitted the strongest LOIs (Letters of Intent) — are asked to sharpen their pencils and submit best and final offers.
It's similar to a final bidding round where:
- Bidders may be asked to improve their price or terms
- The seller may provide additional information or access to management to help bidders refine their proposals
- The seller or their advisor will use this to create competitive tension and drive the best outcome
The term comes from the idea of contestants "baking" their best version of something for judges — in this case, buyers "baking" their best deal.
Example usage:
“After narrowing it down to the top three LOIs, we ran a bake off to see who’d come in with the strongest final offer.”
If you're writing or speaking more formally, you might also hear:
- “Final bid round”
- “Best and final offer (BAFO) process”
- “Second round bidding”
But “bake off” is definitely the insider, shorthand term used among deal professionals.
